A real estate company owns 120 apartments which are fully occupied when the rent is $650 per month. Analytics indicate that for
each $25 increase in rent, 4 apartments will become unoccupied. What rent should be charged in order to obtain the largest gross income
2 answers:
Answer:
Check the explanation
Explanation:
This is a question under Calculus <em><u>(which is another segment of mathematics and it is utilized for understanding the changes between values that are related by a function. Calculus is used in a lot of diverse fields of study such as astronomy, physics, biology, economics, medicine, engineering and sociology).</u></em>
The step by step solution to the above question can be seen in the attached image below:
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Answer:
Please see the calculation explanation below and the depreciation expense chart for all methods is attached.
Explanation:
1. STRAIGHT-LINE DEPRECIATION METHOD:
<em>Depreciation Expense = (Total Cost - Residual Value) / Useful Life </em>
Depreciation Expense = ($70,000 - $10,000) / 3 years
Depreciation Expense = $60,000 / 3 years
Depreciation Expense = $20,000 per year
2. DOUBLE DECLINING BALANCE DEPRECIATION METHOD:
<em>Depreciation Expense Rate = (100% / Useful Life) x 2 </em>
Depreciation Expense Rate = (100% / 3) x 2
Depreciation Expense Rate = 66.67%
<em>2013: </em>
Depreciation Expense = $70,000 x 66.67% = $46,667
<em>2014: </em>
Depreciation Expense = ($70,000 - $46,667) x 66.67% = $15,556
Since the residual value is $10,000 and as per Double Declining Balance Method, the point at which Book Value is equal to the residual value, no depreciation is taken.
<em>Depreciation Expense = (Total Cost - Residual Value) - (Accumulated Depreciation) </em>
Depreciation Expense = ($70,000 - $10,000) - ($46,667)
Depreciation Expense = $13,333
<em>2015: </em>
No Depreciation Expense for year 3, as Book value is already equal to residual value in year 2.
3. PER HOUR DEPRECIATION METHOD:
<em>2013:</em><em> </em>
<em>Depreciation Cost per hour = (Engine Hours in 2013 / Total Engine Hours) x (Total Cost - Residual Value) </em>
Depreciation Cost per hour = (500 / 1,200) x ($70,000 - $10,000)
Depreciation Cost per hour = $25,000
<em>2014: </em>
<em>Depreciation Cost per hour = (Engine Hours in 2014 / Total Engine Hours) x (Total Cost - Residual Value) </em>
Depreciation Cost per hour = (400 / 1,200) x ($70,000 - $10,000)
Depreciation Cost per hour = $20,000
<em>2015: </em>
<em>Depreciation Cost per hour = (Engine Hours in 2015 / Total Engine Hours) x (Total Cost - Residual Value) </em>
Depreciation Cost per hour = (300 / 1,200) x ($70,000 - $10,000)
Depreciation Cost per hour = $15,000
